Snapchat is a photo messaging service prized by more than 100 million daily active users that provides a sense of inconspicuousness on the web. Snapchat doesn’t save images but instead provides quick “snaps” of content for seconds before they’re zapped from existence permanently. It was a profoundly unique idea when it hit the scene, particularly among young users who now characterize the app and its advertising market.
In the beginning, evaluations were set high, and the chances of acquisition became both possible and likely. In 2013, Snapchat walked away from Facebook’s $3 billion offer. The startup’s current evaluation floats around $20 billion.
So, maybe Facebook was a little off the mark? At least, it would have seemed that way prior to the financial records leaked by Gawker earlier this month. The balance sheets revealed Snapchat’s financial records from 2014.
According to the leaked documents, Snapchat lost $128 million last year. Revenue was just over $3 million, which isn’t something to scoff at; however, it’s a far cry from what Facebook had offered the year before.
To be fair, the report doesn’t take into account the advertising schemes put into place last October or the ad revenue from the “Discover” feature, which made a huge impression due to notoriously high usage rates. While not accounted for on the balance sheets, these revenue sources would still not close the gap on Snapchat’s unusually high expenses.
“Outside Services” for example, was one of the largest expenses, approaching $14 million in 2014. What that means exactly remains unknown, although it’s likely paying for a mix of contractors, accountants, and similar advisory positions.
Surprisingly, Snapchat spends very little ($600,000) on advertising—something unusual for an app with more than 100 million users.
If you’re a Snapchat fan don’t worry. The company has 300 million in the bank which, according to Mike Dempsey of venture capital analytics firm CB Insights, will keep the business afloat long enough to make up lost ground.
“If Snapchat is at a similar point right now in its business lifecycle as 2012-2013 Twitter, the new funding probably gives them a multi-year runway,” he said.
There’s still plenty of time for Snapchat to recover from a seemingly bad financial year as well as this PR debacle. As the company moves forward with aggressive advertising plans, it’s likely the balance sheets won’t look this grim in the future—that is, if they ever get leaked again.